Lowest Paid Australians Do Deserve a Pay Rise

Brendan O'Connor MP is the Shadow Minister for Employment and Workplace Relations

There is no doubt in my mind that Australians deserve a pay rise.

Both the economic and business indicators are matching what I am hearing from Australians as I travel the country – workers are feeling the pinch and struggling to keep up with cost of living pressures.

This is no surprise considering that wages growth is stagnant and yet annual growth in company profits are around double that of wages.

The message? Company profits continue to grow and workers are not sharing in that success. The link between hard work and fair reward appears severed.

That is why, this week, Labor made a submission to the national minimum wage case arguing for a fair and economically responsible increase to the minimum wage.

We did this because the Australian minimum wage is no longer a living wage.

Over the last 40 years, the gap between the minimum wage and the average wage has increased.

It’s remarkable to think that if cleaners had enjoyed the same wage gains as financial dealers over the same period, they would be earning an extra $16,000 a year.

Instead, over the past year low paid workers have experienced:

  • Increases in electricity prices, nearly six times wages growth.
  • Increases in health related costs, double that of wages growth.
  • Increases in residential house prices, more than eight per cent – four times faster than wages growth.

Labor asked the Fair Work Commission to increase to the minimum wage, recognising flat-lining wages, cost of living pressures and record high levels of household debt relative to incomes.

We also believe the decision should take into account the Turnbull Government’s brutal cuts to pension and family payments, which have been unfair and have hurt the economy.

We must avoid the peril of going down the same path as America, where an appalling minimum wage has contributed to the hollowing out of the middle class and a yawning gap between the obscenely rich and the working poor. 

Either the Turnbull Liberal Government doesn’t understand this risk or if they do get it, they don’t care.

That’s why they have argued against a minimum wage increase and are in support penalty rate cuts. At a time of stagnant wages growth they are doing everything in their power to keep wages low, while increasing taxes on ten million working Australians and giving a tax cut to millionaires and big business.

They fail to understand that stagnant wage growth has economic ramifications. Workers are also consumers, so less money in their pocket means weaker consumer spending and that’s bad for the economy.

There are those that have thought that ANY minimum wage, no matter how low, would cost jobs, but the evidence does not support the notion that responsible increases result in job losses.

Labor’s submission takes into consideration the capacity of industry to pay, but there is a pressing need to rebuild the idea that a fairly paid workforce is a more productive workforce in a more profitable business.

Giving Australians a pay rise, is good for them and good for our economy.


This piece was first published in The Daily Telegraph on Thursday, 15 March 2018.

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  • commented 2018-03-27 17:14:49 +1100
    The share of national income going to wages has been falling since the 1970’s under Labor and under the Coalition.

    Maybe we need a new mechanism for minimum wage determination?